COVID-19’s sweep through the globe has prompted international responses on a scale that we have seldom seen outside of wartimes — and war has been declared on the deadly virus. The impact of the virus cannot be fully measured at this time, as the U.S. has not yet reached the peak of infections that are guaranteed to overwhelm the healthcare system.
Measures including social distancing, travel restrictions, school closures, and the shutdown of non-essential businesses have been enacted and will only continue to spread. The economic impact has been severe, as lawmakers rush to provide relief to the millions of Americans that have been abruptly laid off. What does all of that mean for the steel industry? Here’s what you need to know now.
Automakers Response to COVID-19
In response to COVID-19 and an attempt to protect workers, the Big 3 automakers in Detroit, Ford, General Motors, and Chrysler have halted operations to clean and sanitize their manufacturing plants.
Honda and Subaru have halted manufacturing operations indefinitely as the virus spreads. This will cause a significant reduction in the steel manufacturing industry as only 75% of the U.S. steel demand remains.
COVID-19 Effects on Steel Workers and the Steel Industry
It is difficult to ascertain the full effects of COVID-19 on the steel industry as a whole. However, with a reduction in demand, it can be expected that profits and stocks will see a drop. U.S Steel
Stocks have already experienced significant drops in stock prices, even before the U.S. saw its first case of the coronavirus. That said, it’s best to prepare for the worst, as we know that the virus has not finished its devastating path through the country.
Long-term Effects on Steel Industry Workers
Layoffs are coming for the steel industry. Unfortunately, some steel workers will be laid off as the economy continues its downward dive and they will join the millions of Americans who have made unemployment claims in the past month alone.
However, as the need for the production of ventilators and other PPE equipment increases to desperate levels, it is possible that steel workers may see their plants repurposed to manufacture these products. The President has invoked the Defense Production Act of 1950 to use his authority to make manufacturers produce ventilators.
Not only will this help to fulfill the need for these life-saving machines, but it could ensure that only a limited number of workers will be laid off. General Motors has announced that it will utilize its facilities and equipment to aid Ventec Life Systems, a ventilator manufacturer, increase its production.
Key Takeaways
No one knows for sure what the long-term effects of COVID-19 on the economy will be as a whole. With the economy and stocks taking a downward turn in recent weeks, it’s likely that the steel industry will suffer — just how much, depends on a number of factors. For now, it’s best to practice social distancing and follow CDC recommendations.
